What is the difference between a FICO Score and a VantageScore?

FICO Scores are created by the Fair Isaac Corporation and are the most widely used credit scores by lenders, with FICO Score 8 being the most common version. VantageScores are a competing credit scoring model developed by the three major credit bureaus (Experian, Equifax, and TransUnion). Both scores use similar data from your credit reports but employ different algorithms, leading to potentially different scores. While VantageScore is gaining traction, FICO remains dominant in lending decisions.

How often does my FICO Score update?

Your FICO Score updates as new information is reported to the credit bureaus. This can happen monthly, or sometimes more frequently, depending on when your creditors report account activity. If you make a significant change, like paying off a large credit card balance, it might take 30-45 days for that change to be reflected in your credit report and, subsequently, your FICO Score.

Can I have different FICO Scores from each credit bureau?

Yes, you can have different FICO Scores from Experian, Equifax, and TransUnion. This is because each bureau may have slightly different information in your credit report, or one bureau might not have received a recent update that another has. Additionally, lenders may use different versions of the FICO model, leading to score variations.

How long do negative items stay on my credit report?

Most negative items, such as late payments, collections, and charge-offs, typically remain on your credit report for seven years from the date of the delinquency. Bankruptcies can stay on your report for up to 10 years. While their impact diminishes over time, they can still affect your score until they are removed.

Is it better to pay off a collection account or leave it unpaid?

It is generally better to pay off a collection account. While paying it off won't remove it from your credit report, it will change its status to "paid" or "settled." This is viewed more favorably by lenders than an unpaid collection. Newer FICO models, like FICO Score 9, also treat paid collections more favorably, and some models ignore paid medical collections entirely.

How can I build credit if I have no credit history?

If you have no credit history, consider options like a secured credit card (requires a cash deposit as collateral), a credit-builder loan (offered by some credit unions), or becoming an authorized user on a trusted family member's credit card. These methods allow you to establish a positive payment history, which is crucial for building a FICO Score.

What is a good FICO Score to buy a house?

While specific requirements vary, a FICO Score of 670 or higher is generally considered good enough to qualify for most conventional mortgages. To secure the best interest rates and loan terms, aiming for a score in the "Very Good" (740-799) or "Exceptional" (800-850) range is highly recommended. For FHA loans, the minimum score can be as low as 580 with a 3.5% down payment, but higher scores still yield better terms.

FICO Score Guide: Understand, Monitor & Improve Your Credit